Climate Change

Climate change is becoming one of the defining factors driving the strategic transformation of the financial sector in Central Asia and the Republic of Kazakhstan. Rising temperatures and the increasing frequency of extreme weather events present significant risks to macroeconomic stability and the sustainability of individual business models. As part of the global climate ecosystem, the Republic of Kazakhstan is already experiencing a number of challenges, including more frequent droughts and floods, fluctuations in water resources, and growing climate-related impacts on urban and housing infrastructure.

Under these circumstances, Otbasy Bank JSC, as a key institution in the housing finance sector, recognizes the critical importance of timely adaptation to climate change. At the same time, the Bank faces increasing pressure from investors, international partners, customers, and national regulators, who expect financial institutions to demonstrate transparency, accountability, and the ability to integrate climate-related aspects into their development strategies.

Since 2024, Otbasy Bank AO has been actively implementing a comprehensive approach to integrating the climate agenda into its strategic and operational processes. A systematic effort has begun to develop an internal methodology for assessing climate-related risks, including the following:

A procedure for conducting climate stress testing and scenario analysis to assess the impact of climate factors on the Bank’s mortgage portfolio;

Classification of physical and transition risks, taking into account regional specificities of the country and the vulnerability of the portfolio;

Assessment of the sensitivity of collateral and borrowers to climate threats, followed by the integration of climate-related factors into underwriting and credit decision-making procedures.

These initiatives are based on internationally recognized frameworks, such as research-based recommendations of the Bank for International Settlements (BIS), guidance from the European Central Bank, and sustainability reporting standards by GRI and SASB, as well as the requirements of IFRS S2 – the global standard for climate-related disclosures. Moreover, the Bank’s ESG transformation aligns with the strategic priorities of the Republic of Kazakhstan aimed at achieving carbon neutrality by 2060.

For Otbasy Bank AO, the climate agenda goes beyond regulatory compliance and is viewed as a key component of long-term sustainability, competitiveness, and social responsibility. Climate-related risk management is becoming an integral part of the Bank’s mission – to ensure sustainable access to quality housing for the population, taking into account the climate challenges faced by the regions of Kazakhstan where the Bank operates.